Filed: Sep. 16, 2016
Latest Update: Sep. 16, 2016
Summary: ORDER CHERYL R. ZWART , Magistrate Judge . For the reasons stated on the record, (Filing No. 104), UP's objections to NL's discovery (as outlined in the attached chart), are overruled in part and sustained in part as follows: 1) As to Production Request 24 and 40, and Interrogatory No. 21, the parties have reached a stipulation and no further assistance is needed from the court. 2) As to remaining discovery disputes outlined by the parties, for the timeframe beginning in 2013 and to pres
Summary: ORDER CHERYL R. ZWART , Magistrate Judge . For the reasons stated on the record, (Filing No. 104), UP's objections to NL's discovery (as outlined in the attached chart), are overruled in part and sustained in part as follows: 1) As to Production Request 24 and 40, and Interrogatory No. 21, the parties have reached a stipulation and no further assistance is needed from the court. 2) As to remaining discovery disputes outlined by the parties, for the timeframe beginning in 2013 and to prese..
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ORDER
CHERYL R. ZWART, Magistrate Judge.
For the reasons stated on the record, (Filing No. 104), UP's objections to NL's discovery (as outlined in the attached chart), are overruled in part and sustained in part as follows:
1) As to Production Request 24 and 40, and Interrogatory No. 21, the parties have reached a stipulation and no further assistance is needed from the court.
2) As to remaining discovery disputes outlined by the parties, for the timeframe beginning in 2013 and to present, United Pacific Pet (UP) shall:
a. Produce its quarterly financial statements;
b. Investigate whether any documents exist which will aid in determining the cost of goods sold; direct costs; overhead costs; and indirect costs associated with UP's sale of NL products specifically. If such documents exist, they must be promptly produced. If they do not exist, UP shall provide a statement, signed under oath, stating that such documents do not exist.
c. Produce all documents underlying UP's determination of its gross profit margin and net profit margin for the sale of NL products, including all documents underlying UP's 24.5% profit margin calculation, along with any other documents useful in determining its profit margins for the sale of NL products, including documents reflecting purchases and sales of NL products, and the sales and overhead costs incurred and specifically attributable to the sale of NL products.
d. Provide an interrogatory response, signed under oath by UP, explaining the methodology used by UP to track profit margins for the sale of its products in general, and if a different method was used for NL product sales, a description of the method used as to NL products specifically.
e. To the extent not already disclosed, produce UP's monthly sales reports for NL products for the time period from 2013 to present.
f. For each pet food manufacturer or other individual or business that UP has begun a distribution relationship with since November 25, 2015, identify (broken down by month) the amount of product UP has ordered/purchased since November 25, 2015. All documents produced in response to this subparagraph 2(f) shall be disclosed to only counsel and the parties' specially retained expert witnesses until such time as the court both: i) determines that failure to mitigate can be raised as a defense to a claim for breach of an exclusive distributorship contract, and ii) enters an order specifically permitting disclosure to NL itself.
g. Produce all documents reflecting the projection of sales, forecasts, or estimations of all of UP's proposed purchases and/or sales of Nature's Logic products.
To assist the Court in more efficiently addressing the parties' discovery dispute(s), the parties shall meet and confer, and jointly complete the following chart. The purpose of this chart is to succinctly state each party's position and the last compromise offered when the parties met and conferred. The fully completed chart shall be e-mailed to chambers at zwart@ned.uscourts.gov.
The moving party is: Plaintiff/Counterclaim Defendant NL Enterprises, LLC
The responding party is: Defendant/Counterclaimant United Pacific Pet, LLC
Note: If discovery from both parties is at issue, provide a separate sheet for each moving party.
Discovery Request at Relevant to Moving Party's Responding Party's Initial Moving Party's Last Offered Responding Party's Last
Issue prove ... Initial Position Position Compromise Offered Compromise
First RFPD No. 18 UPP's claimed Withdraw Defendant objected that the Counsel for UPP indicated on The documents provided to
damages/lost objections and Request was "overly broad, 8/3/16, that it would produce Plaintiff allowed it to
"Each of your financial profits produce all unduly burdensome and "financial information." determine the Company's
statements (including all responsive sought production of Counsel for NL prior to seeing financial condition and
supporting work papers) for documents documents not relevant to any of the documents profitability prior to the alleged
the years 2011-2015." because any parties' claim or referenced by counsel UPP, breach of contract. UPP
requested defense and which were indicated that it would review 001236 and UPP 001237 sets
documents are unlikely to lead to the documentation to be forth YTD income for 2015
relevant and discoverable information." produced, but without having including gross sales, net
necessary to Defendant also objected on seen the "financial sales, cost of goods sold,
calculation of lost the grounds that it sought information" to be provided, gross profit, overhead, etc.
profits. confidential and proprietary could not have, and did not,
commercial information. agree that such information
would be sufficient. The
On 8/3/16, counsel agreed documents received on
to accept financial 8/24/2016 — the first time NL
statements prior to the counsel saw what "financial
alleged breach of contract information" was going to be
sufficiently detailed to produced — was a two page of
demonstrate UPP's summary financial information
financial condition and (for the years 2014-2015
profitability. These only), contains no supporting
documents were produced documentation, which is
as UPP 001236 — UPP required by NL's expert in
001237. order to calculate UPP's lost
profits.
First RFPD No. 19 UPP's claimed Withdraw Defendant objected that the See last offered compromise The documents produced
damages/lost objections and Request was "overly broad, to First RFPD 18. (UPP 001238-UPP 001239)
"Your latest financial profits produce all unduly burdensome and permit the Plaintiff to
statement (including copies responsive sought production of determine the profitability of
of all supporting work documents documents not relevant to the Company and its financial
papers) prepared in 2016." because any parties' claim or condition based upon its most
requested defense and which were recent financial statement
documents are unlikely to lead to (June, 2016). The documents
relevant and discoverable information." detail gross sales, net sales,
necessary to Defendant also objected on cost of sales, gross profit,
calculation of lost the grounds that it sought overhead, operating income,
profits. confidential and proprietary net income, etc.
commercial information.
See Response to RFPD
No. 18. UPP produced
UPP 00001238 through
UPP 001239.
First RFPD No. 20 UPP's claimed Withdraw See Response to RFPD See last offered compromise The produced financial
damages/lost objections and No. 18. UPP produced to First RFPD 18. information (UPP 001238-1239)
"Your monthly financial profits produce all documents demonstrating for June, 2016 show
statements for January responsive its financial condition post financial condition and
2016-present." documents alleged breach. profitability through June,
because 2016. UPP will update said
requested statements to present.
documents are
relevant and
necessary to
calculation of lost
profits.
First RFPD No. 23 UPP's claimed Withdraw Defendant objected that the NL did not agree to withdraw The Defendant's electronic
damages/lost objections and Request was "overbroad, the request, because it had not ledger is merely being
"Your electronic ledger with profits produce all unduly burdensome, not seen what documents UPP wasgoing requested to harass the
transaction detail for responsive reasonably limited in time to produce. UPP's counsel Plaintiff. Each check, credit,
January 1, 2011 — present." documents or scope, and sought the represented that the information debit, etc., since January 1,
because production of documents would be contained in the 2011, which have no
"financial information" to be
requested not relevant to any parties' provided by UPP. Upon receipt relationship to this litigation or
documents are claim or defense and which of the "financial information" to the Plaintiff, is clearly an
relevant and were unlikely to lead to on 8/24/2016 — the first time inappropriate request. The
necessary to discoverable information." NL counsel saw what financial statements produced
calculation of lost Moreover, the information "financial information" was prior to January 1, 2016 and
profits. sought trade secret and going to be produced — it was thereafter demonstrate the
other confidential and discovered that the requested Company's profitability and
proprietary information. information was not included in financial condition (UPP
the four pages produced. 001236-UPP 001239).
On 8/3/16 counsel agreed
to withdraw RFPD No. 23 if
it was provided with the
documents demonstrating
UPP's financial condition
and profitability before and
after the alleged breach of
contract, which were
produced.
First ROGs No. 18 UPP's claimed Withdraw Counsel agreed on 8/3/16 UPP's counsel represented on This information is contained
damages/lost objections and that documents provided in 8/3/16 that the information would in UPP 001236-UPP 001239.
"Provide complete detail profits produce all Response to RFPD's 18, be contained in the financial
(including methodology of responsive 19, 20 would suffice to documents to be provided by
determination), for each documents answer this Interrogatory. UPP. Upon receipt of the
year from 2013-2015, for all because "financial information" on
costs (both fixed and requested 8/24/2016 — the first time NL
variable) associated with documents are counsel saw what "financial
distributing Plaintiff's relevant and information" was going to be
products, including, but not necessary to produced — it was discovered
limited to: calculation of lost that the requested information
(a) Cost of goods sold; profits. was not included in the four
(b) Direct costs; pages produced.
(c) Overhead costs; and
(d) Indirect costs.
First RFPD No. 21 UPP's claimed Withdraw UPP continues to object as This information is necessary Reports for non-NL product
damages/lost objections and such information is unduly in order for NL's expert to lines relate to NL as a
"Each of your monthly sales profits produce all burdensome given its calculate lost profits. The few competitor and would be to
reports, broken out by responsive limited probative value and documents provided by UPP the competitive disadvantage
product line, for January documents is confidential and show that UPP's net profit of the companies with which
2012-present." because proprietary. NL has no margin is less than 1% of its NL competes. Profit margin
requested need to know sales reports cost-of-goods sold. However, are not set forth on the sales
documents are for non-NL product lines. UPP's expert has asserted a reports. The designation of
relevant and profit margin of 24%, and NL's such information is currently
necessary to expert needs to compare the being challenged by Plaintiff
calculation of lost profit margin by product to as they wish to show this type
profits. determine how UPP's expert of information, including
reached his conclusions, Schedule A of the Expert
since his report does not Report to their clients, even
indicate how that was done. though it contains information
UPP sends monthly reports to unrelated to NL product lines.
its manufacturers, so the
information should be readily
available and not unduly
burdensome.
Further, the Court's Amended
Protective Order is in place to
protect confidential and
proprietary information.
First RFPD No. 22 UPP's claimed Withdraw UPP continues to object as See last offered compromise NL has no need for UPP's
damages/lost objections and such information is unduly to First RFPD No. 21. financial projections for non-NL
"Each of your monthly profits produce all burdensome given its product lines. The Expert
financial projections, broken responsive limited probative value and Report projects sales of non-NL
out by product line, for May documents is confidential and product line based upon
2016-December 31, because proprietary. NL has no past performance.
2016." requested need for UPP's financial
documents are projections for non-NL
relevant and product lines.
necessary to
calculation of lost
profits.
First RFPD No. 24 UPP's claimed Withdraw Monthly sales reports were NL only has in its possession UPP will stipulate that if the
damages/lost objections and provided by UPP to NL and those sales reports that were sales reports, if provided to
"Each of your monthly sales profits produce all is in NL's possession. NL actually provided to it in the NL, during the period of the
reports involving Nature's responsive is aware of the amount of course of its business by UPP Distribution Contract were
Logic products (including documents product purchased by UPP. from 2012 to March 2016. No accurate and no additional
the locations where the because responsive documents have different monthly sales reports
products were sold." requested been produced in discovery. will be offered by UPP.
documents are
relevant and If UPP is willing to stipulate
necessary to that the sales reports provided
calculation of lost by UPP to NL during that
profits. period are true, correct,
accurate, and that no
additional or different reports
will be offered or used by UPP
in this litigation, NL agrees
limit this request to UPP's
sales reports from May 2016
to present which have not
been provided
by UPP and which UPP has
directly put at issue in its
preliminary injunction briefing.
First RFPD No. 25 UPP's claimed Withdraw UPP objected that the NL did not agree to withdraw the Any document which "reflects"
damages/lost objections and Request was "overly broad, request, because it had not seen profits made on the sale of
"Each document which in profits produce all unduly burdensome, not what documents UPP was going Nature's Logic products may
any way reflects profits you responsive reasonably limited in time to produce. UPP's counsel involve every single piece of
have made on the sale of documents or scope" and said represented that the information correspondence, sales
Nature's Logic products." because documents constituted would be contained in the reports, orders, returns, and is
financial documents to be
requested trade secret or are provided by UPP. Upon receipt simply not reasonably
documents are commercially confidential of the "financial information" calculated to find discoverable
relevant and and proprietary. Moreover, on 8/24/2016 — the first time information.
necessary to the Defendant is unable to NL counsel saw what
calculation of lost ascertain what is meant by "financial information" was Further, the Expert Report
profits. the phrase "reflects profits." going to be produced — it was states exactly how the expert
discovered that the requested witness reached his
Counsel agreed on 8/3/16 information was not included in conclusions. Moreover, the
that if documents were the four pages produced. expert's deposition is
produced as to overall scheduled for September 22,
profitability in addition to This information is necessary 2016 and Plaintiff's counsel
UPP 000300-000435, no in order for NL's expert to may ask him to clarify his
further documents were calculate lost profits. The few methodology and the
required. documents provided by UPP documents relied upon for his
appear to show that UPP's net conclusions as set forth in his
profit margin is less than 1% report.
of its cost-of-goods sold.
However, UPP's expert has
asserted a profit margin of
24%, and NL's expert needs
to compare the profit margin
by product to determine how
UPP's expert reached his
conclusions, since his report
does not indicate how that
was done. UPP sends
monthly reports to its
manufacturers, so the
information should be readily
available and not unduly
burdensome.
Further, the Court's Amended
Protective Order is in place to
protect confidential and
proprietary information.
First RFPD No. 40 UPP's request Please update UPP produced documents UPP 001071-001074 only UPP will agree to update
for preliminary response with UPP 001071 through UPP includes purported lost sales current information to
"Each document reflecting injunction and current 001074 through 5/28/2016. UPP has demonstrate lost sales
any order(s) placed by assertion of information alleged that preliminary through the present on
retailers/customer, or other irreparable and through present injunctive relief is necessary Nature's Logic products.
accounts, of Nature's Logic immediate due to immediate, irreparable
products from January 2012 harm harm in the form of lost sales
to present that you were that is purportedly still
unable to fill." occurring. UPP has an
ongoing obligation to
supplement its discovery
responses as additional
responsive material is
obtained. We are merely
asking that they do so at this
time in light of their recent
representations of ongoing
and immediate harm.
First ROGs No. 7 UPP's UPP agreed to UPP continues to object to UPP agreed to produce UPP has identified all of its
mitigation of produce said Interrogatory as responsive documents upon product lines to Plaintiff.
"For each [pet food damages responsive overbroad and unduly entry of protective order, Mitigation does not apply in a
manufacturer or other documents upon burdensome. Moreover, which has now been entered. breach of an exclusive
individual or business that entry of protective there is no relationship distributorship case. The
you have begun a order, which has between the information NL has raised the defense of damages caused by the
distribution relationship with now been sought in Interrogatory No. failure to mitigate in response breach of the NL Contract are
since November 25, 2015], entered. 7 and the injury suffered by to UPP's claims. UPP's ability not offset by other business
identify (broken down by NL's breach of contract. to devote efforts to other pet after the breach.
month) the amount of food lines and generate sales
product you have for those lines are directly
ordered/purchased since related and relevant to UPP's
November 25, 2015." mitigation efforts.
First ROGs No. 10 UPP's claimed Withdraw This Interrogatory is not a Withdraw objections and The Expert Report sets forth
damages/lost objections and RFPD and is inappropriate provide responsive answer. the manner in which the
"Identify and describe in profits produce all and unduly burdensome. The information is relevant expert calculated future
detail any projections, responsive and necessary to calculation sales/purchases. The report
forecasts, or estimations of documents of UPP's claimed lost profits. sets forth the manner in which
all of your proposed because all calculations were
purchases of and/or sales of requested UPP's expert has purportedly performed to determine the
Nature's Logic products." documents are based his calculation of lost damages allegedly suffered
relevant and profits upon some unknown by UPP. The expert witness'
necessary to and unexplained method of deposition is scheduled for
calculation of lost "linear regression" to estimate September 22, 2016 and he
profits. future sales/purchases. NL is can be asked the manner in
entitled to know whether or which he performed the linear
not there were any actual regression and other
projections, forecasts, or calculations based on
estimations made by UPP projections and future
prior to litigation concerning forecasts of product sales.
its purchases and/or sales, so
that the actual projections
made by UPP can be
compared to the estimations
of its expert.
First ROGs No. 21 UPP's claimed Withdraw UPP will produce If UPP will stipulate that UPP will produce documents
damages/lost objections and documents relative to the "documents relative to" means relative to the loss of
"Provide detailed financial profits, as well produce all loss of customers as a all documents sought in the California Pet as a client due
information (including, but as UPP's responsive result of the alleged breach interrogatory and not merely to the alleged breach of
not limited to, sales, request for documents of the contract. some selected documents contract by NL Enterprises.
expenses, profits, etc.) for preliminary because that are responsive, NL
all retailers/customers lost injunction and requested agrees to accept UPP's initial
as a result of the assertion of documents are position.
termination of the irreparable and relevant and
Distribution Contract with immediate necessary to
Plaintiff for the period: harm calculation of lost
(a) January 1, 2011-December profits and claim
2015, by year; of immediate
and irreparable harm.
(b) November, 2015 —
present."
The above table outlines the Parties' written discovery disputes.
Counsel for [Plaintiff]: s/Jason Smith
Counsel for [Defendant]: s/Patrick Barrett
